Tax burden on Portugal’s GDP at 34.8% in 2020

  • ECO News
  • 26 March 2021

The tax burden increased in 2020 and reached 34.8% of Portugal's GDP, which is a new record for the country.

According to Statistics Portugal (INE), the country’s tax burden, which includes the tax and contributory revenue, was 70,377.0 million euros, corresponding to 34.8% of GDP.

The government expected a reduction in the tax burden because of the economic crisis, a period in which, normally, tax revenue tends to fall more than the GDP’s contraction. However, this was not the case: not only did the tax burden not fall to several years’ lows, contrary to expectations, it rose to an all-time high.

The public revenue that counts towards the tax burden (tax and contributory revenue) contracted by 4.7%, below the historic reduction of 7.6% of GDP in 2020. This performance – in part reflecting the resilience of the labour market – explains why the tax burden rose in 2020.

In 2019, the total value of tax and social contribution revenues amounted to 73,837.9 million euros (corresponding to 34.5% of the GDP), this being the highest amount ever since at least 1995.

Measured as a percentage of GDP, the tax burden in 2020 is the highest ever, with the figures released today by INE revising downwards the previously projected for 2019, which falls from 34.8% to 34.5%.

Also, according to the provisional data released by the national statistical authority, tax revenues totalled €49,575.6 million in 2020, less than the €53,273.5 million in 2019.

The tax revenue figure for 2020 is also lower than in 2018, when it reached €51,982.3 million and the tax burden stood at 34.7% of GDP.